Surgery Partners, Inc. (SGRY): what the price assumes

In the published model solve dated 2026-Q2, anchored at $15.31, Surgery Partners, Inc. (SGRY) is priced for -3.6% growth. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-06-28.

Generated: 2026-08-10 · Exported: 2026-08-12 · Source: https://boothcheck.com/report/SGRY

Headline

FieldValue
TickerSGRY
CompanySurgery Partners, Inc.
Current price$15.31/sh
CompositionPrivate insurance 51% / Government 42% / Self-pay 3% / Other (payor) 2% / Other service revenues 2%

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basiswhole-company
Operating margin (value-band context)3.5%
Operating margin today11.8%
Margin compression (value-band)-8.3pp
Implied growth-3.6%
Multiple paid17x operating income

The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 7% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~7.4pp (computed at the 7% minimum rate; the CAPM rate 6.3% sits below it).

Reconcile: at the x-ray's 9.3% required return this reads ~11.9%/yr; the models below use their own rates.

How unusual the bet is: within-range

ReferenceValue
vs own history-0.60σ
cohort percentile (of 117 peers)28
implied end-window share0%

Valuation X-Ray

The price is justified by relative-multiple.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset1.29x3expensive
Earnings—0—
Relative0.43x2justifies
Growth—0—

Families that justify the price: Relative

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 5.7%); the inversion above states its own rate.

Per-Model Detail (n=5)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth——no—
DCF Exit MultipleGrowth$11.431.34xnoExit EV/EBITDA: 8.0x / 10.0x / 12.0x (bear / base = today's held flat / bull), 6yr
Relative ValuationRelative$65.120.24xyesP/S fallback (negative EPS): Sector P/S 2.5x × TTM revenue — excluded from consensus
Simple DDMGrowth——no—
Two-Stage DDMGrowth——no—
Simple Excess ReturnAsset$13.151.16xyesReference only (book value floor): BV/sh $13.15, ROE negative
Two-Stage Excess ReturnAsset$11.831.29xyesReference only (book value with convergence): BV/sh $13.15, ROE converges to ke
Discounted Future Market CapGrowth$6.692.29xnoRev $3.3B, growth 5% (input: historical growth; tapered), Terminal P/S: 0.5x / 0.6x / 0.7x (bear / base = today's held flat / bull, cap 8x)
Peter Lynch Fair ValueRelative$0.00—noNegative/zero EPS — earnings-based value floored at $0
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings$4.373.50xnoNormalized EBIT (5y avg op income, one-time charges added back) $0.34B × (1−21%) / WACC 5.7% → EPV (no growth)
Residual IncomeAsset——no—
Graham NumberAsset——no—
EV/EBITDA RelativeRelative$24.260.63xyesEBITDA $0.57B × sector EV/EBITDA 12.0x
FCF YieldEarnings$0.011531.00xyesFCF $208.0M / Kₑ 9.3% — zero-growth perpetuity (excluded from median)
SBC-Adj FCF YieldEarnings$0.011531.00xyesSBC-adj FCF $0.19B (FCF $0.21B − SBC $0.02B) capitalized at Kₑ (excluded from median)
Ben Graham FormulaEarnings——no—
ROIC-Justified P/BAsset$2.206.96xyesBV $13.15 × (ROIC 1.0% / WACC 5.7%)
P/Sales SectorRelative$65.120.24xnoRevenue $3.34B × sector P/S 2.5x
PEG Fair ValueRelative——no—
Earnings YieldEarnings——no—
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Economic-Unit Decomposition (Sum Of The Parts)

Only one reportable economic unit is present in the current topology source. Consolidated operating lenses remain available, but there is no multi-unit decomposition.

UnitRoleValuation basisRevenueReported profitValue evidenceStatus
Surgical Facilitiesoperatingenterprise3.3B reported-currency—withheldunresolved no unit value

No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.

Solvency

FieldValue
Net debt$4.5b
Net debt / NOPAT (after-tax)14.41x
Net debt / operating income (pre-tax)11.38x
Share count CAGR (dilution)9.2%
Burning cashno

Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.

Bullet Takeaways

Bull Case

The counterintuitive fact about Surgery Partners is that a private-equity buyer offered $25.75 per share for the whole company, the board said no, and the stock now trades at $14.54 (June 28, 2026). Bain Capital, already a large owner, put a non-binding bid on the table, and the independent committee concluded the company's prospects as an independent business exceeded the offer. A sophisticated insider valued the equity at nearly double the current price. That does not make the bid the right number, but it is a strong signal that the people closest to the assets see value the public market is discounting.

The asset itself is a structurally favored corner of healthcare. Surgery Partners operates short-stay surgical facilities, ambulatory surgery centers and surgical hospitals, where procedures move out of expensive inpatient hospitals into lower-cost settings. Its filing describes the economics directly: the company charges "facility fees in exchange for providing patient care" covering operating-room, recovery, and equipment usage, and the surgical-facility network "generated approximately $3.1 billion in revenue during 2024". The shift of surgery to outpatient settings is a multi-year tailwind, and Surgery Partners sits in the middle of it with physician partnerships that align the doctors who drive the volume.

The operating momentum is steady. First-quarter revenue grew 4.5% to $810.9 million, with same-facility revenue up 4.4% on a mix of higher case volume and a 3.8% increase in revenue per case, and adjusted EBITDA reached $102.3 million. Management reaffirmed full-year guidance of $3.35 billion to $3.45 billion in revenue and at least $530 million in adjusted EBITDA. On an enterprise-value basis the business trades cheaply against that EBITDA, and the asset-based reads land near book value of $13.15 per share. The bull case is that the outpatient-surgery tailwind plus a discounted entry point, validated by an insider's rejected bid, is a value setup the market is mispricing.

Bear Case

The erosion risk for Surgery Partners is not competitive so much as financial: the debt is quietly consuming the equity. Net debt sits near $4.48 billion against trailing operating income of about $393 million, which is more than 11 times operating profit, and the company posted a net loss of $35.9 million in the first quarter even as adjusted EBITDA was healthy at $102.3 million. That gap, positive EBITDA but a GAAP net loss, is the tell: the interest bill and depreciation are eating the operating profit before it reaches shareholders. The reported book value holds up, but the equity is a thin sliver on top of a very large debt stack, and that is what erodes if results soften.

The other slow erosion is dilution. The share count has grown about 9.2% a year, so even as the business expands, each existing share owns less of it. A company that funds growth by issuing stock and carrying heavy debt is running on two forms of leverage at once, and both work against the per-share holder if returns on the capital deployed disappoint. The physician-partnership model also means minority interests share in the facility economics, so consolidated revenue overstates what flows to Surgery Partners shareholders.

The valuation has to be read through that capital structure. The relative-multiple lens makes the equity look very cheap, but that is partly because a small equity layer sits on a big enterprise value; modest changes in EBITDA or interest costs swing the equity sharply. The asset-based reads land near book, not below it, so the cheapness is on the enterprise, not clearly on the equity. The rejected Bain bid cuts both ways: a willing buyer at $25.75 is a positive signal, but the board's rejection also means the most likely near-term catalyst for the discount to close has been removed, leaving holders to wait on deleveraging that is slow when leverage starts above 11 times. The bear case is that reimbursement pressure, rising labor costs, or a single soft year tips a thinly-capitalized, heavily-indebted equity from cheap to impaired.

Valuation

Surgery Partners is best understood through its capital structure, because the equity is a small claim on a large, levered enterprise. The whole-company operating margin runs about 11.8%, and inverted, today's price embeds roughly flat-to-declining growth, which is why the price reads as value-supported rather than as a growth bet. The methods that apply lean toward cheap, but the leverage colors what that cheapness means.

The family reads are narrow because negative net earnings gate several methods. The relative-multiple lens reads the equity as very cheap, around 0.4 times the value it computes, and the EV/EBITDA read places the enterprise well below the price the sector multiple would support. The asset-based excess-return reads land near the book value of $13.15 per share, just above today's $14.54. The pattern is asset-and-relative supported: the enterprise looks inexpensive against its EBITDA, and the equity sits near book. What the spread does not resolve is the leverage. With net debt above 11 times operating income, the equity value is highly sensitive to small moves in EBITDA or interest costs, so the same numbers that read cheap can read expensive after a modest operating disappointment. The cleanest external marker of value is the rejected Bain bid at $25.75, a willing buyer's read that the board judged still too low.

Solvency is the dominant fact here, not a footnote. Net debt near $4.48 billion against $393 million of operating income, and a balance sheet where the equity is thin relative to the debt, means the downside is governed by the capital structure more than by the operating business. The company generates real free cash flow, about $208 million, which services the debt and funds growth, but the deleveraging path is long from a starting leverage above 11 times. What the buyer underwrites at this price is that the outpatient-surgery tailwind keeps EBITDA growing steadily enough to chip down the leverage, in an equity where the margin for error is set by the debt, not by the demand.

Catalysts

Surgery Partners' first quarter of 2026 paired steady operating growth with a GAAP loss. Revenue rose 4.5% to $810.9 million, with same-facility revenue up 4.4% on 0.6% higher case volume and a 3.8% increase in revenue per case, while adjusted EBITDA reached $102.3 million. The company nonetheless reported a net loss of $35.9 million, the result of interest and depreciation on its large debt load, and reaffirmed full-year guidance of $3.35 billion to $3.45 billion in revenue and at least $530 million in adjusted EBITDA.

The corporate-action backdrop is the other thread. Bain Capital, an existing large shareholder, made a non-binding proposal to take the company private at $25.75 per share, but the independent committee concluded that Surgery Partners' prospects as an independent public company exceeded the offer and ended the discussions. That rejection both signals insider conviction in a higher value and removes the cleanest near-term path for the discount to close. From here, the events that matter are the quarterly cadence of same-facility growth and the trajectory of deleveraging, since the equity's value turns on EBITDA growth working down a leverage ratio that starts above 11 times operating income.

Peer Cohorts (Per Segment, With Filing Citations)

Surgical Facilities (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

Sources

company disclosure, June 2025 · Q1 2026 earnings, May 2026 · Q1 2026 guidance, May 2026

View the full interactive SGRY report on boothcheck